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Retail on Sale: Promotional Orders Are Up 63%

Most consumers now know better than to buy something that’s not on sale or that they can’t find a promotional code for, and retailers are to blame for the learned behavior that’s been a blight on bottom lines.

So far in 2016, orders using some sort of promotion are up 63 percent over the first quarter last year, and full-price sales are down 4 percent, according to the DynamicAction Retail Index: Spring 2016.

“Retailers are relying heavily on discounts and promotions thus far in 2016, continuing the trend from the 2015 holiday season of pulling the promotional ‘lever’ far too often,” the study by retail analytics solution provider DynamicAction noted.

March was especially promotional, with an 86 percent increase in orders using promotions over 2015.

“The antiquated strategy of retailers relying exclusively on their promotional calendars to run their operations has fostered an ingrained need for discounts by consumers, who are increasingly being trained to wait for promotions or discounts prior to making a purchase,” DynamicAction co-founder and CEO John Squire explained.

Retailers surveyed said they’re finding it challenging to convert first-time buyers into second-time buyers, and those conversions are down 6 percent to last year.

Average revenues may have been up 10 percent in the first quarter, but retailers’ control over profits has been stable at best. DynamicAction said retail profits were up an average 5.2% year-over-year in Q1 though most of those gains were in January, with volatility ramping up in February and March.

“The very best retailers are preparing right now to answer customers’ needs and beat shareholders’ expectations during the holiday season of 2016, by focusing on curbing the promotional addiction and utilizing their full data set to better manage inventory and operations,” Squire said.